In another sign of the economy ‘bouncing along the bottom’, US drivers appear to have returned to the road in recent months. Latest figures from the US Highway Administration show a 0.1% rise in vehicle miles travelled during May, the second consecutive month of positive growth since 2007.
But this is unlikely to provide much support for increasingly hard-pressed refiners. European players saw crack margins tumble 62% in Q2 to $1.20/bbl, versus an already low $3.20/bbl in Q1. Weak demand is leading to low refinery operating rates, whilst normally strong diesel margins have failed to keep up with higher crude oil prices.
US refiners are also worried, with new government proposals for carbon ‘cap-and-trade’, likely to increase their costs significantly. Plus, of course, new CAFE standards aim at raising average auto mileage by 42%, at the same time as legislation to promote ethanol usage is also effectively reducing oil product demand.
Last August, we published a major Study, ‘Feedstocks for Profit’, with refining experts Wood Mackenzie, which forecast that “competition is likely to increase within the main regions, as exporters find life much more difficult.” This scenario now seems to be coming true.
In terms of chemical sales, the increased competition comes at a time when demand is already weak. But on the positive side, refiners’ problems could well provide chemical companies with an opportunity to mitigate their problems, by accessing feedstocks at distressed prices.
- Our work
- REPORTS
- The pH ReportMonthly focus on what is driving the global economy
- NewsletterWeekly spotlight on a key issue impacting the global economy
- New Normal eBookBoom, Gloom and the New Normal: How the Western Babyboomers are Changing Demand Patterns, Again
- White PaperA Roadmap for the Global Energy Sector – IEA May 2021 report synopsis
- White PaperRenewable Carbon for Chemicals and Derived Materials – Nova-Institute April 2021 report synopsis
- REPORTS
- About us